Implementation of OMB Guidance on Nonprocurement Debarment and Suspension, 14016-14030 [E7-5167]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 72, Number 56 (Friday, March 23, 2007)]
[Proposed Rules]
[Pages 14016-14030]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-5167]



[[Page 14015]]

-----------------------------------------------------------------------

Part VII





Department of Housing and Urban Development





-----------------------------------------------------------------------



2 CFR Part 2424, 24 CFR Parts 5, 6, et al.



 Implementation of OMB Guidance on Nonprocurement Debarment and 
Suspension; Proposed Rule

Federal Register / Vol. 72, No. 56 / Friday, March 23, 2007 / 
Proposed Rules

[[Page 14016]]


-----------------------------------------------------------------------

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

2 CFR Part 2424 and 24 CFR Parts 5, 6, 8, 15, 21, 24, 25, 26, 84, 
85, 91, 92, 103, 107, 135, 200, 202, 203, 206, 245, 291, 401, 402, 
570, 572, 585, 941, 954, 982, 983, 1000, 1003, 1005, 1006, 3282, 
and 3500

[Docket No. FR-5071-P-01]
RIN 2501-AD29


Implementation of OMB Guidance on Nonprocurement Debarment and 
Suspension

AGENCY: Office of the Secretary, HUD.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would relocate HUD's regulations governing 
nonprocurement debarment and suspension to a new part in Title 2 of the 
Code of Federal Regulations. The relocation is part of a governmentwide 
initiative to create one location where the public can locate both the 
Office of Management and Budget (OMB) guidance for grants and 
agreements and the associated federal agency implementing regulations. 
The proposed new part would adopt the OMB guidance on nonprocurement 
debarment and suspension and supplement it with HUD-specific 
clarifications and additions. The proposed rule would also make 
conforming changes to HUD regulations referencing the nonprocurement 
debarment and suspension regulations. This proposed regulatory action 
is an administrative simplification that would make no substantive 
change in HUD policy or procedures for nonprocurement debarment and 
suspension.

DATES: Comment Due Date: May 22, 2007.

ADDRESSES: Interested persons are invited to submit comments regarding 
this proposed rule to the Office of General Counsel, Rules Docket 
Clerk, Department of Housing and Urban Development, 451 Seventh Street, 
SW., Room 10276, Washington, DC 20410-0001. Communications should refer 
to the above docket number and title and should contain the information 
specified in the ``Request for Comments'' section.
    Electronic Submission of Comments. Interested persons may submit 
comments electronically through the federal eRulemaking Portal at 
www.regulations.gov. HUD strongly encourages commenters to submit 
comments electronically. Electronic submission of comments allows the 
commenter maximum time to prepare and submit a comment, ensures timely 
receipt by HUD, and enables HUD to make them immediately available on 
www.regulations.gov for viewing by other commenters and interested 
members of the public. Commenters should follow the instructions 
provided on that site to submit comments electronically.
    No Facsimile Comments. Facsimile (FAX) comments are not acceptable. 
In all cases, communications must refer to the docket number and title.
    Public Inspection of Public Comments. All comments and 
communications submitted to HUD will be available, without charge, for 
public inspection and copying between 8 a.m. and 5 p.m. weekdays at the 
above address. Due to security measures at the HUD Headquarters 
building, an advance appointment to review the public comments must be 
scheduled by calling the Regulations Division at (202) 708-3055 (this 
is not a toll-free number). Persons with hearing or speech impairments 
may access this number via TTY by calling the toll-free Federal 
Information Relay Service at (800) 877-8339. Copies of all comments 
submitted are available for inspection and downloading at 
www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Dane Narode, Assistant General 
Counsel, Office of Program Enforcement, Administrative Proceedings 
Division, Department of Housing and Urban Development, 1250 Maryland 
Avenue, SW., Suite 200, Washington DC 20024-0500; telephone (202) 708-
2350 (this is not a toll-free number); e-mail address Dane--M.--
Narode@hud.gov. Hearing- or speech-impaired individuals may access the 
telephone number listed above by calling the toll-free Federal 
Information Relay Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION:

I. Background

    OMB is undertaking to restructure the framework of federal 
government policies for grants, other financial assistance, and 
nonprocurement agreements in an effort to make it easier for applicants 
and recipients to locate and comply with such policies. On May 11, 
2004, OMB established a new Title 2 of the Code of Federal Regulations 
(CFR) (69 FR 26276), which is comprised of two subtitles. Subtitle A, 
entitled ``Government-wide Grants and Agreements,'' contains OMB policy 
guidance to federal agencies on grants and agreements. Subtitle B, 
entitled ``Federal Agency Regulations for Grants and Agreements,'' will 
contain the regulations of federal agencies implementing the OMB 
guidance, as it applies to grants and other financial assistance 
agreements and nonprocurement transactions. The HUD regulations 
governing nonprocurement debarment and suspension would be located in 
Subtitle B at 2 CFR part 2424. Consolidating the OMB guidance and co-
locating the agency regulations provides a good foundation for 
streamlining and simplifying the policies governing grants and 
agreements.
    On August 31, 2005, OMB continued its initiative to create a single 
location where OMB guidance and federal agency implementing regulations 
could be found by incorporating four guidance documents into 2 CFR, 
Subtitle A, and making conforming changes (70 FR 51862). OMB is 
engaging in a multi-phase process by which it will relocate and revise 
guidance documents. In the first phase, OMB is relocating its 
circulars, in their current form, into chapter II of subtitle A. In the 
second phase, OMB will publish guidance in chapter I of subtitle A 
after OMB: (1) Proposes for public comment any changes to streamline 
and simplify the guidance based on recommendations from interagency 
working groups; and (2) Resolves the comments and finalizes the 
guidance with the help of the working groups. Part 180 of 2 CFR, 
entitled ``OMB Guidelines to Agencies on Government-wide Debarment and 
Suspension (Nonprocurement),'' has been immediately incorporated into 
subtitle A, chapter I, because the substance of the guidance is up to 
date and is not expected to change in the near future. The other three 
guidance documents have been located in subtitle A, chapter II, pending 
review and revision.

II. This Proposed Rule

A. Adoption of OMB Guidance

    This proposed rule would adopt the OMB guidance in subparts A 
through I of 2 CFR part 180, as supplemented by HUD's policies and 
procedures for nonprocurement debarment and suspension at 2 CFR part 
2424. This implementation would give regulatory effect to the OMB 
guidance for HUD. The provisions of 2 CFR part 180 are supplemented and 
clarified to address HUD-specific issues at 2 CFR part 2424. The 
nonprocurement debarment and suspension standards being codified at 2 
CFR part 180 will serve as governmentwide guidance having effect for 
those federal agencies that adopt them.

[[Page 14017]]

    Through this proposed rule, HUD is creating a new part at 2 CFR 
part 2424 that adopts, by reference, the baseline provisions of 2 CFR 
part 180 and includes HUD-specific supplements, clarifications, and 
modifications to 2 CFR part 180. Accordingly, HUD's regulations at 24 
CFR part 24, entitled ``Government-wide Debarment and Suspension 
(Nonprocurement),'' are being supplanted by 2 CFR part 2424. It is 
important to note that this does not result in a change in HUD policy 
or procedures since the August 31, 2005, rule promulgating 2 CFR part 
180 conformed those OMB requirements to the federal agencies' November 
26, 2003, updated version of the nonprocurement debarment and 
suspension common rule (68 FR 66534), which HUD adopted. The proposed 
rule would result in entities following the policies and procedures 
specified in each applicable section of the OMB guidance in subparts A 
through I of 2 CFR part 180, because that section has been implemented 
in part 2424.

B. Conforming Changes

    This proposed rule would make conforming regulatory changes 
throughout Title 24 to reflect the new location of HUD's suspension and 
debarment regulations at 2 CFR part 2424. Various parts of Title 24 
have cross-references to the nonprocurement suspension and debarment 
provisions contained at 24 CFR part 24. This proposed rule replaces the 
references to 24 CFR part 24 with 2 CFR part 2424. HUD is also revising 
all references to the Drug Free Workplace Act (the Act). The 
requirements of the Act were originally included within 24 CFR part 24. 
The November 26, 2003, final common rule created a new part, 24 CFR 
part 21, which is where the Act's requirements can now be found. This 
proposed rule is revising outdated references regarding the Act, 
replacing references to 24 CFR part 24 with 24 CFR part 21. Neither the 
conforming regulatory changes nor the revision of references to the Act 
are intended to have substantive effect on the Department's 
regulations.
    Prior to 1995, HUD required entities to certify that they would 
comply with the requirements of the Act. The certification 
requirements, which were contained in the appendices of 24 CFR part 24, 
were eliminated by HUD in a September 11, 1995, final rule (60 FR 
47260) as part of a governmentwide streamlining effort. The elimination 
of the certification requirement does not absolve entities of complying 
with the requirements of the Act, as implemented by HUD at 24 CFR part 
21. HUD is taking advantage of the opportunity afforded by this 
proposed rule in order to revise and remove those parts of Title 24 
where the regulations still refer to this certification requirement.

C. Revisions to the Limited Denial of Participation Regulations

    HUD is taking the opportunity afforded by this proposed rulemaking 
to revise its Limited Denial of Participation (LDP) Regulations. The 
regulations governing LDPs were formerly found at 24 CFR part 24, 
subpart J. Due to the relocation of part 24, the LDP regulations will 
now be found at 2 CFR part 2424, subpart J. The LDP regulations are a 
HUD-specific supplement to the governmentwide nonprocurement debarment 
and suspension regulations. An LDP is an action taken to immediately 
exclude a person or entity from participating in a specific program, 
within a limited geographical area, for a specified period not to 
exceed 12 months.
    HUD is proposing to revise 24 CFR 24.1110 in order to clarify one 
of the enumerated causes for an LDP. Currently, Sec.  24.1110(a)(8) 
lists a cause for imposing an LDP as the ``commission of an offense 
listed in Sec.  24.800.'' The language of the current regulation could 
be misinterpreted as limiting the incorporated causes to just Sec.  
24.800(a), which sets forth causes for debarment based on a conviction 
or civil judgment for the commission of certain offenses. The proposed 
change would avoid such confusion by amending the regulation to account 
for the relocation of the nonprocurement debarment and suspension 
rules, as well as to clarify that included within the causes for 
imposing an LDP under new 2 CFR 2424.1110(a)(8) are any acts or 
omissions that would be cause for debarment under 2 CFR 180.800. 
Additionally, this proposed rule would remove 24 CFR 24.1110(a)(12), 
which provides debarment or suspension by another federal agency as a 
basis for an LDP. That provision is unnecessary in light of the 
governmentwide effect of the suspension and debarment procedures.
    When the governmentwide nonprocurement debarment and suspension 
regulations were amended on November 26, 2003, HUD inadvertently 
removed reference to the information that is to be considered in 
deciding whether to terminate, modify, or affirm an LDP. This proposed 
rule would redesignate the provision at 24 CFR 24.1130 to 2 CFR 24.1130 
and amend it by reincorporating paragraph (c) to specify that the 
applicable factors found in 2 CFR 180.860 may be considered by the 
Departmental official or designee in deciding whether to terminate, 
modify, or affirm an LDP. In addition, the Departmental Hearing Officer 
may also consider the factors listed at 2 CFR 180.860 in making any 
recommended decision.

D. Technical and Clarifying Changes

    HUD proposes to make a clarifying change to Sec.  5.105, in which 
the term ``participant'' is being added. This modification is 
consistent with HUD's current usage and interpretation of entities and 
activities covered by the suspension and debarment regulations.
    HUD is making a technical correction to 24 CFR 21.605, which 
currently contains an incorrect reference. Section 21.605(a)(2) 
currently states that OMB circular A-102 is implemented at 24 CFR part 
24. The reference would state that OMB Circular A-102 is implemented at 
24 CFR part 85.
    HUD would also make a technical amendment to Sec.  84.13 to remove 
HUD as a regulated entity under part 84. In serving as HUD's 
implementation of OMB circulars, part 84 applies to federal grants and 
agreements awarded to institutions of higher education, hospitals, and 
other non-profit organizations. This technical amendment would not 
alter HUD's obligations under 2 CFR part 2424 or 24 CFR part 21.

III. Specific Invitation To Comment

    HUD is proposing the new part 2424 in 2 CFR in order to adopt the 
OMB guidelines, by making the same additions and clarifications as were 
made to HUD's codification of the common rule on nonprocurement 
suspension and debarment in the November 26, 2003, final common rule. 
HUD's clarification of the term ``covered transaction,'' adding that 
each salary payment under an employment contract constitutes a separate 
covered transaction, has been relocated to the definition of 
``Nonprocurement Transaction'' for ease of use. All other 
clarifications and additions remain as described in the November 26, 
2003, final rule. HUD has added a new Sec.  2424.137, which codifies 
existing agency practice as required by the OMB Guidelines at 2 CFR 
180.25(b)(1). Therefore, in soliciting comments on this proposed rule, 
HUD is not seeking to revisit substantive issues that were addressed 
during the preparation of the 2003 final common rule. However, because 
the new part is not intended to make any changes in current policies 
and procedures, HUD specifically invites comments on any unintended 
changes in substantive content that the

[[Page 14018]]

new part in 2 CFR would make relative to 24 CFR part 24.

IV. Findings and Certifications

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) 
generally requires an agency to conduct a regulatory flexibility 
analysis of any rule subject to notice and comment rulemaking 
requirements, unless the agency certifies that the rule will not have a 
significant economic impact on a substantial number of small entities. 
The regulatory amendments that would be made by this proposed rule are 
procedural. This proposed rule would relocate HUD's regulations 
governing nonprocurement debarment and suspension to a new part in 
Title 2 of the Code of Federal Regulations. The relocation is part of a 
governmentwide initiative to create one location where the public can 
find both the OMB requirements for grants and agreements and the 
associated federal agency implementing regulations. The proposed rule 
would also make conforming changes to HUD regulations referencing the 
nonprocurement debarment and suspension regulations. This proposed 
regulatory action is an administrative simplification that would make 
no substantive change in HUD policy or procedures for nonprocurement 
debarment and suspension. The rule would not have any impact on the 
substantive rights or duties of small entities because the policies and 
procedures are being relocated, while remaining substantively the same. 
Accordingly, the undersigned certifies that this rule will not have a 
significant economic impact on a substantial number of small entities.
    Notwithstanding HUD's determination that this rule will not have a 
significant effect on a substantial number of small entities, HUD 
specifically invites comments regarding any less burdensome 
alternatives to this rule that will meet HUD's objectives as described 
in this preamble.

Environmental Impact

    This proposed rule does not direct, provide for assistance or loan 
and mortgage insurance for, or otherwise govern or regulate, real 
property acquisition, disposition, leasing, rehabilitation, alteration, 
demolition, or new construction, or establish, revise, or provide for 
standards for construction or construction materials, manufactured 
housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this 
proposed rule is categorically excluded from the requirements of the 
National Environmental Policy Act (42 U.S.C. 4321 et seq.).

Executive Order 13132, Federalism

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any rule that has federalism implications if the rule 
either imposes substantial direct compliance costs on state and local 
governments and is not required by statute, or the rule preempts state 
law, unless the agency meets the consultation and funding requirements 
of section 6 of the Executive Order. This proposed rule does not have 
federalism implications and does not impose substantial direct 
compliance costs on state and local governments or preempt state law 
within the meaning of the Executive Order.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1531-1538) (UMRA) establishes requirements for federal agencies to 
assess the effects of their regulatory actions on state, local, and 
tribal governments, and on the private sector. This proposed rule does 
not impose any federal mandates on any state, local, or tribal 
governments, or on the private sector, within the meaning of UMRA.

List of Subjects

2 CFR Part 2424

    Administrative practice and procedure, Debarment and suspension, 
Grant programs, Reporting and recordkeeping requirements.

24 CFR Part 5

    Administrative practice and procedure, Aged, Claims, Crime, 
Government contracts, Grant programs--housing and community 
development, Individuals with disabilities, Intergovernmental 
relations, Loan programs--housing and community development, Low and 
moderate income housing, Mortgage insurance, Penalties, Pets, Public 
housing, Rent subsidies, Reporting and recordkeeping requirements, 
Social security, Unemployment compensation, Wages.

24 CFR Part 6

    Administrative practice and procedure, Civil rights, Equal 
employment opportunity, Grant programs--housing and community 
development, Investigations, Loan programs--housing and community 
development, Reporting and recordkeeping requirements.

24 CFR Part 8

    Administrative practice and procedure, Civil rights, Equal 
employment opportunity, Grant programs--housing and community 
development, Individuals with disabilities, Loan programs--housing and 
community development, Reporting and recordkeeping requirements.

24 CFR Part 15

    Classified information, Courts, Freedom of information, Government 
employees, Reporting and recordkeeping requirements.

24 CFR Part 21

    Administrative practice and procedure, Drug abuse, Grant programs, 
Loan programs, Reporting and recordkeeping requirements.

24 CFR Part 24

    Administrative practice and procedure, Government contracts, Grant 
programs, Loan programs, Technical assistance, Reporting and 
recordkeeping requirements.

24 CFR Part 25

    Administrative practice and procedure, Loan programs--housing and 
community development, Organization and functions (Government 
agencies), Reporting and recordkeeping requirements.

24 CFR Part 26

    Administrative practice and procedure.

24 CFR Part 84

    Accounting, Colleges and universities, Grant programs, Hospitals, 
Nonprofit organizations, Reporting and recordkeeping requirements.

24 CFR Part 85

    Accounting, Grant programs, Indians, Intergovernmental relations, 
Reporting and recordkeeping requirements.

24 CFR Part 91

    Aged, Grant programs--housing and community development, Homeless, 
Individuals with disabilities, Low and moderate income housing, 
Reporting and recordkeeping requirements.

24 CFR Part 92

    Administrative practice and procedure, Grant programs--housing and 
community development, Low and moderate income housing, Manufactured 
homes, Rent subsidies, Reporting and recordkeeping requirements.

[[Page 14019]]

24 CFR Part 103

    Administrative practice and procedure, Aged, Fair housing, 
Individuals with disabilities, Intergovernmental relations, 
Investigations, Mortgages, Penalties, Reporting and recordkeeping 
requirements.

24 CFR Part 107

    Administrative practice and procedure, Fair housing, Grant 
programs--housing and community development, Loan programs--housing and 
community development, Religious discrimination, Reporting and 
recordkeeping requirements, Sex discrimination.

24 CFR Part 135

    Administrative practice and procedure, Community development, Equal 
employment opportunity, Government contracts, Grant programs--housing 
and community development, Housing, Loan programs--housing and 
community development, Reporting and recordkeeping requirements, Small 
businesses.

24 CFR Part 200

    Administrative practice and procedure, Claims, Equal employment 
opportunity, Fair housing, Housing standards, Lead poisoning, Loan 
programs--housing and community development, Mortgage insurance, 
Organization and functions (Government agencies), Penalties, Reporting 
and recordkeeping requirements, Social security, Unemployment 
compensation, Wages.

24 CFR Part 202

    Administrative practice and procedure, Home improvement, 
Manufactured homes, Mortgage insurance, Reporting and recordkeeping 
requirements.

24 CFR Part 203

    Hawaiian Natives, Home improvement, Indians--lands, Loan programs--
housing and community development, Mortgage insurance, Reporting and 
recordkeeping requirements, Solar energy.

24 CFR Part 206

    Aged, Condominiums, Loan programs--housing and community 
development, Mortgage insurance, Reporting and recordkeeping 
requirements.

24 CFR Part 245

    Condominiums, Cooperatives, Grant programs--housing and community 
development, Loan programs--housing and community development, Low and 
moderate income housing, Rent subsidies, Reporting and recordkeeping 
requirements, Utilities.

24 CFR Part 291

    Community facilities, Homeless, Low and moderate income housing, 
Mortgages, Reporting and recordkeeping requirements, Surplus government 
property.

24 CFR Part 401

    Grant programs--housing and community development, Loan programs--
housing and community development, Low and moderate income housing, 
Mortgage insurance, Mortgages, Rent subsidies, Reporting and 
recordkeeping requirements.

24 CFR Part 402

    Low and moderate income housing, Rent subsidies.

24 CFR Part 570

    Administrative practice and procedure, American Samoa, Community 
development block grants, Grant programs--education, Grant programs--
housing and community development, Guam, Indians, Loan programs--
housing and community development, Low and moderate income housing, 
Northern Mariana Islands, Pacific Islands Trust Territory, Puerto Rico, 
Reporting and recordkeeping requirements, Student aid, Virgin Islands.

24 CFR Part 572

    Government property, Grant programs--housing and community 
development, Low and moderate income housing, Nonprofit organizations, 
Reporting and recordkeeping requirements.

24 CFR Part 585

    Community facilities, Grant programs--housing and community 
development, Homeless, Low and moderate income housing, Reporting and 
recordkeeping requirements.

24 CFR Part 941

    Grant programs--housing and community development, Loan programs--
housing and community development, Public housing.

24 CFR Part 954

    Administrative practice and procedure, Grant programs--housing and 
community development, Grant programs--Indians, Indians, Low and 
moderate income housing, Manufactured homes, Rent subsidies, Reporting 
and recordkeeping requirements.

24 CFR Part 982

    Grant programs--housing and community development, Grant programs--
Indians, Indians, Public housing, Rent subsidies, Reporting and 
recordkeeping requirements.

24 CFR Part 983

    Grant programs--housing and community development, Rent subsidies, 
Reporting and recordkeeping requirements.

24 CFR Part 1000

    Aged, Community development block grants, Grant programs--housing 
and community development, Grant programs--Indians, Indians, 
Individuals with disabilities, Public housing, Reporting and 
recordkeeping requirements.

24 CFR Part 1003

    Alaska, Community development block grants, Grant programs--housing 
and community development, Grant programs--Indians, Indians, Reporting 
and recordkeeping requirements.

24 CFR Part 1005

    Indians, Loan programs--Indians, Reporting and recordkeeping 
requirements.

24 CFR Part 1006

    Community development block grants, Grant programs--housing and 
community development, Grant programs--Indians, Hawaiian Natives, Low 
and moderate income housing, Reporting and recordkeeping requirements.

24 CFR Part 3282

    Administrative practice and procedure, Consumer protection, 
Intergovernmental relations, Investigations, Manufactured homes, 
Reporting and recordkeeping requirements.

24 CFR Part 3500

    Consumer protection, Housing, Mortgages, Reporting and 
recordkeeping requirements.

    Accordingly, for the reasons discussed in the preamble, HUD 
proposes to amend 2 CFR part 2424 and 24 CFR parts 5, 6, 8, 15, 21, 24, 
25, 26, 84, 91, 92, 103, 107, 135, 200, 202, 203, 206, 245, 291, 401, 
402, 570, 572, 585, 941, 954, 982, 983, 1000, 1003, 1005, 1006, 3282, 
and 3500 to read as follows:

[[Page 14020]]

TITLE 2--GRANTS AND AGREEMENTS

Subtitle B--Federal Agency Regulations for Grants and Agreements

PART 2424--NONPROCUREMENT DEBARMENT AND SUSPENSION; DEPARTMENT OF 
HOUSING AND URBAN DEVELOPMENT

    1. Under the authority of 42 U.S.C. 3535(d), add Chapter XXIV 
consisting of part 2424 to Subtitle B to read as follows:

CHAPTER XXIV--DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

PART 2424--NONPROCUREMENT DEBARMENT AND SUSPENSION

Sec.
2424.10 What does this part do?
2424.20 Does this part apply to me?
2424.30 What policies and procedures must I follow?
Subpart A--General
2424.137 Who in HUD may grant an exception to let an excluded person 
participate in a covered transaction?
Subpart B--Covered Transactions
2424.220 What contracts and subcontracts, in addition to those 
listed in 2 CFR 180.220, are covered transactions?
Subpart C--Responsibilities of Participants Regarding Transactions
2424.300 What must I do before I enter into a covered transaction 
with another person at the next lower tier (HUD supplement to 
governmentwide definition at 2 CFR 180.300)?
2424.332 What methods must I use to pass requirements down to 
participants at lower tiers with whom I intend to do business?
Subpart D--Responsibilities of Federal Agency Officials Regarding 
Transactions
2424.437 What method do I use to communicate to a participant the 
requirements described in the OMB guidance at 2 CFR 180.435?
Subpart E--[Reserved]
Subpart F--[Reserved]
Subpart G--Suspension
2424.747 Who conducts fact finding for HUD suspensions?
Subpart H--Debarment
2424.842 Who conducts fact finding for HUD debarments?
Subpart I--Definitions
2424.952 Hearing officer.
2424.970 Nonprocurement transaction (HUD supplement to 
governmentwide definition at 2 CFR 180.970).
2424.995 Principal (HUD supplement to governmentwide definition at 2 
CFR 180.995).
2424.1017 Ultimate beneficiary.
Subpart J--Limited Denial of Participation
2424.1100 What is a limited denial of participation?
2424.1105 Who may issue a limited denial of participation?
2424.1110 When may a HUD official issue a limited denial of 
participation?
2424.1115 When does a limited denial of participation take effect?
2424.1120 How long may a limited denial of participation last?
2424.1125 How does a limited denial of participation start?
2424.1130 How may I contest my limited denial of participation?
2424.1135 Do Federal agencies coordinate limited denial of 
participation actions?
2424.1140 What is the scope of a limited denial of participation?
2424.1145 May HUD impute the conduct of one person to another in a 
limited denial of participation?
2424.1150 What is the effect of a suspension or debarment on a 
limited denial of participation?
2424.1155 What is the effect of a limited denial of participation on 
a suspension or a debarment?
2424.1160 May a limited denial of participation be terminated before 
the term of the limited denial of participation expires?
2424.1165 How is a limited denial of participation reported?

    Authority: Sec. 2455, Pub. L. 103-355, 108 Stat. 3327; E.O. 
12549, 3 CFR, 1986 Comp., p. 189; E.O. 12689, 3 CFR, 1989 Comp., p. 
235.


Sec.  2424.10  What does this part do?

    In this part, HUD adopts, as HUD policies, procedures, and 
requirements for nonprocurement debarment and suspension, the OMB 
guidance in subparts A through I of 2 CFR part 180, as supplemented by 
this part. This adoption thereby gives regulatory effect for HUD to the 
OMB guidance as supplemented by this part. This part satisfies the 
requirements in section 3 of Executive Order 12549, ``Debarment and 
Suspension'' (3 CFR 1986 Comp., p. 189), Executive Order 12689, 
``Debarment and Suspension'' (3 CFR 1989 Comp., p. 235) and 31 U.S.C. 
6101 note (Section 2455, Pub. L. 103-355, 108 Stat. 3327).


Sec.  2424.20  Does this part apply to me?

    This part and, through this part, pertinent portions of subparts A 
through I of 2 CFR part 180 (see table at 2 CFR 180.100(b)), apply to 
you if you are a--
    (a) Participant or principal in a ``covered transaction'' (see 
subpart B of 2 CFR part 180 and the definition of ``nonprocurement 
transaction'' at 2 CFR 180.970, as supplemented by Sec.  2424.970 of 
this part);
    (b) Respondent in a HUD suspension or debarment action;
    (c) HUD debarment or suspension official; or
    (d) HUD grants officer, agreements officer, or other official 
authorized to enter into any type of nonprocurement transaction that is 
a covered transaction.


Sec.  2424.30  What policies and procedures must I follow?

    The HUD policies and procedures that you must follow are the 
policies and procedures specified in each applicable section of the OMB 
guidance in subparts A through I of 2 CFR part 180, as that section is 
supplemented by the section in this part with the same section number. 
The contracts that are covered transactions, for example, are specified 
by section 220 of the OMB guidance (i.e., 2 CFR 180.220) as 
supplemented by section 220 in this part (i.e., Sec.  2424.220). For 
any section of OMB guidance in subparts A through I of 2 CFR part 180 
that has no corresponding section in this part, HUD policies and 
procedures are those in the OMB guidance.

Subpart A--General


Sec.  2424.137  Who in HUD may grant an exception to let an excluded 
person participate in a covered transaction?

    The Secretary, the Director of the Enforcement Center, or a 
designee may grant an exception permitting an excluded person to 
participate in a particular covered transaction. If the Secretary, the 
Director of the Enforcement Center, or a designee grants an exception, 
the exception must be in writing and state the reason(s) for deviating 
from the governmentwide policy in Executive Order 12549.

Subpart B--Covered Transactions


Sec.  2424.220  What contracts and subcontracts, in addition to those 
listed in 2 CFR 180.220, are covered transactions?

    In addition to the contracts covered under 2 CFR 180.220(b) of the 
OMB guidance, this part applies to any contract, regardless of tier, 
that is awarded by a contractor, subcontractor, supplier, consultant, 
or its agent or representative in any transaction, if the contract is 
to be funded or provided by HUD under a covered nonprocurement 
transaction and the amount of the contract is expected to equal or 
exceed $25,000. This extends the coverage of the HUD nonprocurement 
suspension and debarment requirements to all lower tiers of 
subcontracts under covered nonprocurement transactions, as permitted 
under the OMB guidance at 2 CFR 180.220(c) (see optional lower-tier 
coverage in the figure in the Appendix to 2 CFR part 180).

[[Page 14021]]

Subpart C--Responsibilities of Participants Regarding Transactions


Sec.  2424.300  What must I do before I enter into a covered 
transaction with another person at the next lower tier (HUD supplement 
to governmentwide definition at 2 CFR 180.300)?

    (a) You, as a participant, are responsible for determining whether 
you are entering into a covered transaction with an excluded or 
disqualified person. You may decide the method by which you do so.
    (1) You may, but are not required to, check the Excluded Parties 
List System (EPLS).
    (2) You may, but are not required to, collect a certification from 
that person.
    (b) In the case of an employment contract, HUD does not require 
employers to check the EPLS prior to making salary payments pursuant to 
that contract.


Sec.  2424.332  What methods must I use to pass requirements down to 
participants at lower tiers with whom I intend to do business?

    To communicate the requirements to lower-tier participants, you 
must include a term or condition in the transaction requiring 
compliance with subpart C of the OMB guidance in 2 CFR part 180, as 
supplemented by this subpart.

Subpart D--Responsibilities of Federal Agency Officials Regarding 
Transactions


Sec.  2424.437  What method do I use to communicate to a participant 
the requirements described in the OMB guidance at 2 CFR 180.435?

    To communicate to a participant the requirements described in 2 CFR 
180.435 of the OMB guidance, you must include a term or condition in 
the transaction that requires the participant to: comply with subpart C 
of 2 CFR part 180, as supplemented by subpart C of this part, and 
include a similar term or condition in lower-tier covered transactions.

Subpart E--[Reserved]

Subpart F--[Reserved]

Subpart G--Suspension


Sec.  2424.747  Who conducts fact finding for HUD suspensions?

    In all HUD suspensions, the official receiving the referral for 
findings of fact regarding disputed material facts must be a hearing 
officer.

Subpart H--Debarment


Sec.  2424.842  Who conducts fact finding for HUD debarments?

    In all HUD debarments, the official receiving the referral for 
findings of fact regarding disputed material facts must be a hearing 
officer.

Subpart I--Definitions


Sec.  2424.952  Hearing officer.

    Hearing Officer means an Administrative Law Judge or Board of 
Contract Appeals Judge authorized by HUD's Secretary or by the 
Secretary's designee to conduct proceedings under this part.


Sec.  2424.970  Nonprocurement transaction (HUD supplement to 
governmentwide definition at 2 CFR 180.970).

    In the case of employment contracts that are covered transactions, 
each salary payment under the contract is a separate covered 
transaction.


Sec.  2424.995  Principal (HUD supplement to governmentwide definition 
at 2 CFR 180.995).

    A person who has a critical influence on, or substantive control 
over, a covered transaction, whether or not employed by the 
participant. Persons who have a critical influence on, or substantive 
control over, a covered transaction may include, but are not limited 
to:
    (a) Loan officers;
    (b) Staff appraisers and inspectors;
    (c) Underwriters;
    (d) Bonding companies;
    (e) Borrowers under programs financed by HUD or with loans 
guaranteed, insured, or subsidized through HUD programs;
    (f) Purchasers of properties with HUD-insured or Secretary-held 
mortgages;
    (g) Recipients under HUD assistance agreements;
    (h) Ultimate beneficiaries of HUD programs;
    (i) Fee appraisers and inspectors;
    (j) Real estate agents and brokers;
    (k) Management and marketing agents;
    (l) Accountants, consultants, investment bankers, architects, 
engineers, and attorneys who are in a business relationship with 
participants in connection with a covered transaction under a HUD 
program;
    (m) Contractors involved in the construction or rehabilitation of 
properties financed by HUD, with HUD-insured loans or acquired 
properties, including properties held by HUD as mortgagee-in-
possession;
    (n) Closing agents;
    (o) Turnkey developers of projects financed by or with financing 
insured by HUD;
    (p) Title companies;
    (q) Escrow agents;
    (r) Project owners;
    (s) Administrators of hospitals, nursing homes, and projects for 
the elderly financed or insured by HUD; and
    (t) Developers, sellers, or owners of property financed with loans 
insured under Title I or Title II of the National Housing Act.


Sec.  2424.1017  Ultimate beneficiary.

    Ultimate beneficiaries of HUD programs include, but are not limited 
to, subsidized tenants and subsidized mortgagors, such as those 
assisted under Section 8 Housing Assistance Payment contracts, by 
Section 236 Rental Assistance, or by Rent Supplement payments.

Subpart J--Limited Denial of Participation


Sec.  2424.1100  What is a limited denial of participation?

    A limited denial of participation excludes a specific person from 
participating in a specific program, or programs, within a HUD field 
office's geographic jurisdiction, for a specific period of time. A 
limited denial of participation is normally issued by a HUD field 
office, but may be issued by a Headquarters office. The decision to 
impose a limited denial of participation is discretionary and based on 
the best interests of the Federal government.


Sec.  2424.1105  Who may issue a limited denial of participation?

    The Secretary designates HUD officials who are authorized to impose 
a limited denial of participation, affecting any participant and/or 
their affiliates, except mortgagees approved by the Federal Housing 
Administration (FHA).


Sec.  2424.1110  When may a HUD official issue a limited denial of 
participation?

    (a) An authorized HUD official may issue a limited denial of 
participation against a person, based upon adequate evidence of any of 
the following causes:
    (1) Approval of an applicant for insurance would constitute an 
unsatisfactory risk;
    (2) There are irregularities in a person's past performance in a 
HUD program;
    (3) The person has failed to maintain the prerequisites of 
eligibility to participate in a HUD program;
    (4) The person has failed to honor contractual obligations or to 
proceed in

[[Page 14022]]

accordance with contract specifications or HUD regulations;
    (5) The person has failed to satisfy, upon completion, the 
requirements of an assistance agreement or contract;
    (6) The person has deficiencies in ongoing construction projects;
    (7) The person has falsely certified in connection with any HUD 
program, whether or not the certification was made directly to HUD;
    (8) The person has committed any act or omission that would be 
cause for debarment under 2 CFR 180.800;
    (9) The person has violated any law, regulation, or procedure 
relating to the application for financial assistance, insurance, or 
guarantee, or to the performance of obligations incurred pursuant to a 
grant of financial assistance or pursuant to a conditional or final 
commitment to insure or guarantee;
    (10) The person has made or procured to be made any false statement 
for the purpose of influencing in any way an action of the Department; 
or
    (11) Imposition of a limited denial of participation by any other 
HUD office.
    (b) Filing of a criminal Indictment or Information shall constitute 
adequate evidence for the purpose of limited denial of participation 
actions. The Indictment or Information need not be based on offenses 
against HUD.
    (c) Imposition of a limited denial of participation by any other 
HUD office shall constitute adequate evidence for a concurrent limited 
denial of participation. Where such a concurrent limited denial of 
participation is imposed, participation may be restricted on the same 
basis without the need for additional conference or further hearing.
    (d) An affiliate or organizational element may be included in a 
limited denial of participation solely on the basis of its affiliation, 
and regardless of its knowledge of or participation in the acts 
providing cause for the sanction. The burden of proving that a 
particular affiliate or organizational element is currently responsible 
and not controlled by the primary sanctioned party (or by an entity 
that itself is controlled by the primary sanctioned party) is on the 
affiliate or organizational element.


Sec.  2424.1115  When does a limited denial of participation take 
effect?

    A limited denial of participation is effective immediately upon 
issuance of the notice.


Sec.  2424.1120  How long may a limited denial of participation last?

    A limited denial of participation may remain in effect up to 12 
months.


Sec.  2424.1125  How does a limited denial of participation start?

    A limited denial of participation is made effective by providing 
the person, and any specifically named affiliate, with notice:
    (a) That the limited denial of participation is being imposed;
    (b) Of the cause(s) under Sec.  2424.1110 for the sanction;
    (c) Of the potential effect of the sanction, including the length 
of the sanction and the HUD program(s) and geographic area affected by 
the sanction;
    (d) Of the right to request, in writing, within 30 days of receipt 
of the notice, a conference under Sec.  2424.1130; and
    (e) Of the right to contest the limited denial of participation 
under Sec.  2424.1130.


Sec.  2424.1130  How may I contest my limited denial of participation?

    (a) Within 30 days after receiving a notice of limited denial of 
participation, you may request a conference with the official who 
issued such notice. The conference shall be held within 15 days after 
the Department's receipt of the request for a conference, unless you 
waive this time limit. The official or designee who imposed the 
sanction shall preside. At the conference, you may appear with a 
representative and may present all relevant information and materials 
to the official or designee. Within 20 days after the conference, or 
within 20 days after any agreed-upon extension of time for submission 
of additional materials, the official or designee shall, in writing, 
advise you of the decision to terminate, modify, or affirm the limited 
denial of participation. If all or a portion of the remaining period of 
exclusion is affirmed, the notice of affirmation shall advise you of 
the opportunity to contest the notice and to request a hearing before a 
Departmental Hearing Officer. You have 30 days after receipt of the 
notice of affirmation to request this hearing. If the official or 
designee does not issue a decision within the 20-day period, you may 
contest the sanction before a Departmental Hearing Officer. Again, you 
have 30 days from the expiration of the 20-day period to request this 
hearing. If you request a hearing before the Departmental Hearing 
Officer, you must submit your request to the Debarment Docket Clerk, 
Department of Housing and Urban Development, 451 Seventh Street, SW., 
B-133 Portals 200, Washington, DC 20410-0500.
    (b) You may skip the conference with the official and you may 
request a hearing before a Departmental Hearing Officer. This must also 
be done within 30 days after receiving a notice of limited denial of 
participation. If you opt to have a hearing before a Departmental 
Hearing Officer, you must submit your request to the Debarment Docket 
Clerk, Department of Housing and Urban Development, 451 Seventh Street, 
SW., B-133 Portals 200, Washington, DC 20410-0500. The hearing before 
the Departmental Hearing Officer is more formal than the conference 
before the sanctioning official described above. The Departmental 
Hearing Officer will conduct the hearing in accordance with 24 CFR part 
26, subpart A. The Departmental Hearing Officer will issue findings of 
fact and make a recommended decision. The sanctioning official will 
then make a final decision, as promptly as possible, after the 
Departmental Hearing Officer's recommended decision is issued. The 
sanctioning official may reject the recommended decision or any 
findings of fact, only after specifically determining that the decision 
or any of the facts are arbitrary, capricious, or clearly erroneous.
    (c) In deciding whether to terminate, modify, or affirm a limited 
denial of participation, the Departmental official or designee may 
consider the factors listed at 2 CFR 180.860. The Departmental Hearing 
Officer may also consider the factors listed at 2 CFR 180.860 in making 
any recommended decision.


Sec.  2424.1135  Do Federal agencies coordinate limited denial of 
participation actions?

    Federal agencies do not coordinate limited denial of participation 
actions. As stated in Sec.  2424.1100, a limited denial of 
participation is a HUD-specific action and applies only to HUD 
activities.


Sec.  2424.1140  What is the scope of a limited denial of 
participation?

    The scope of a limited denial of participation is as follows:
    (a) A limited denial of participation generally extends only to 
participation in the program under which the cause arose. A limited 
denial of participation may, at the discretion of the authorized 
official, extend to other programs, initiatives, or functions within 
the jurisdiction of an Assistant Secretary. The authorized official, 
however, may determine that where the sanction is based on an 
indictment or conviction, the sanction shall apply to all programs 
throughout HUD.
    (b) For purposes of this subpart, participation includes receipt of 
any benefit or financial assistance through

[[Page 14023]]

grants or contractual arrangements; benefits or assistance in the form 
of loan guarantees or insurance; and awards of procurement contracts.
    (c) The sanction may be imposed for a period not to exceed 12 
months, and shall be effective within the geographic jurisdiction of 
the office imposing it, unless the sanction is imposed by an Assistant 
Secretary or Deputy Assistant Secretary, in which case the sanction may 
be imposed on either a nationwide or a more restricted basis.


Sec.  2424.1145  May HUD impute the conduct of one person to another in 
a limited denial of participation?

    For purposes of determining a limited denial of participation, HUD 
may impute conduct as follows:
    (a) Conduct imputed from an individual to an organization. HUD may 
impute the fraudulent, criminal, or other improper conduct of any 
officer, director, shareholder, partner, employee, or other individual 
associated with an organization, to that organization when the improper 
conduct occurred in connection with the individual's performance of 
duties for or on behalf of that organization, or with the 
organization's knowledge, approval, or acquiescence. The organization's 
acceptance of the benefits derived from the conduct is evidence of 
knowledge, approval, or acquiescence.
    (b) Conduct imputed from an organization to an individual or 
between individuals. HUD may impute the fraudulent, criminal, or other 
improper conduct of any organization to an individual, or from one 
individual to another individual, if the individual to whom the 
improper conduct is imputed participated in, had knowledge of, or had 
reason to know of the improper conduct.
    (c) Conduct imputed from one organization to another organization. 
HUD may impute the fraudulent, criminal, or other improper conduct of 
one organization to another organization when the improper conduct 
occurred in connection with a partnership, joint venture, joint 
application, association, or similar arrangement, or when the 
organization to whom the improper conduct is imputed has the power to 
direct, manage, control, or influence the activities of the 
organization responsible for the improper conduct. Acceptance of the 
benefits derived from the conduct is evidence of knowledge, approval, 
or acquiescence.


Sec.  2424.1150  What is the effect of a suspension or debarment on a 
limited denial of participation?

    If you have submitted a request for a hearing pursuant to Sec.  
2424.1130 of this subpart, and you also receive, pursuant to subpart G 
or H of this part, a notice of proposed debarment or suspension that is 
based on the same transaction(s) or the same conduct as the limited 
denial of participation, as determined by the debarring or suspending 
official, the following rules shall apply:
    (a) During the 30-day period after you receive a proposed debarment 
or suspension, during which you may elect to contest the debarment 
under 2 CFR 180.815, or the suspension pursuant to 2 CFR 180.720, all 
proceedings in the limited denial of participation, including 
discovery, are automatically stayed.
    (b) If you do not contest the proposed debarment pursuant to 2 CFR 
180.815, or the suspension pursuant to 2 CFR 180.720, the final 
imposition of the debarment or suspension shall also constitute a final 
decision with respect to the limited denial of participation, to the 
extent that the debarment or suspension is based on the same 
transaction(s) or conduct as the limited denial of participation.
    (c) If you contest the proposed debarment pursuant to 2 CFR 
180.815, or the suspension pursuant to 2 CFR 180.720, then:
    (1) Those parts of the limited denial of participation and the 
debarment or suspension based on the same transaction(s) or conduct, as 
determined by the debarring or suspending official, shall be 
immediately consolidated before the debarring or suspending official;
    (2) Proceedings under the consolidated portions of the limited 
denial of participation shall be stayed before the hearing officer 
until the suspending or debarring official makes a determination as to 
whether the consolidated matters should be referred to a hearing 
officer. Such a determination must be made within 90 days of the date 
of the issuance of the suspension or proposed debarment, unless the 
suspending/debarring official extends the period for good cause.
    (i) If the suspending or debarring official determines that there 
is a genuine dispute as to material facts regarding the consolidated 
matter, the entire consolidated matter will be referred to the hearing 
officer hearing the limited denial of participation, for additional 
proceedings pursuant to 2 CFR 180.750 or 180.845.
    (ii) If the suspending or debarring official determines that there 
is no dispute as to material facts regarding the consolidated matter, 
jurisdiction of the hearing officer under 2 CFR part 2424, subpart J, 
to hear those parts of the limited denial of participation based on the 
same transaction[s] or conduct as the debarment or suspension, as 
determined by the debarring or suspending official, will be transferred 
to the debarring or suspending official, and the hearing officer 
responsible for hearing the limited denial of participation shall 
transfer the administrative record to the debarring or suspending 
official.
    (3) The suspending or debarring official shall hear the entire 
consolidated case under the procedures governing suspensions and 
debarments, and shall issue a final decision as to both the limited 
denial of participation and the suspension or debarment.


Sec.  2424.1155  What is the effect of a limited denial of 
participation on a suspension or a debarment?

    The imposition of a limited denial of participation does not affect 
the right of the Department to suspend or debar any person under this 
part.


Sec.  2424.1160  May a limited denial of participation be terminated 
before the term of the limited denial of participation expires?

    If the cause for the limited denial of participation is resolved 
before the expiration of the 12-month period, the official who imposed 
the sanction may terminate it.


Sec.  2424.1165  How is a limited denial of participation reported?

    When a limited denial of participation has been made final, or the 
period for requesting a conference pursuant to Sec.  2424.1130 has 
expired without receipt of such a request, the official imposing the 
limited denial of participation shall notify the Director of the 
Compliance Division in the Departmental Enforcement Center of the scope 
of the limited denial of participation.

TITLE 24--HOUSING AND URBAN DEVELOPMENT

Subtitle B--Regulations Relating To Housing and Urban Development

PART 5--GENERAL HUD PROGRAM REQUIREMENTS; WAIVERS

    2. The authority citation for part 5 continues to read as follows:

    Authority: 42 U.S.C. 1437a, 1437c, 1437d, 1437f, 1437n, 3535(d), 
and Sec. 327, Pub. L. 109-115, 119 Stat. 2936.

    3. Revise Sec.  5.105(c) and (d) to read as follows:


Sec.  5.105  Other Federal requirements.

* * * * *
    (c) Debarred, suspended, or ineligible contractors and 
participants. The prohibitions at 2 CFR part 2424 on the

[[Page 14024]]

use of debarred, suspended, or ineligible contractors and participants.
    (d) Drug-Free Workplace. The Drug-Free Workplace Act of 1988 (41 
U.S.C. 701, et seq.) and HUD's implementing regulations at 24 CFR part 
21.

PART 6--NONDISCRIMINATION IN PROGRAMS AND ACTIVITIES RECEIVING 
ASSISTANCE UNDER TITLE I OF THE HOUSING AND COMMUNITY DEVELOPMENT 
ACT OF 1978

    4. The authority citation for part 6 continues to read as follows:

    Authority: 42 U.S.C. 3535(d); 42 U.S.C. 5309.

    5. Revise Sec.  6.12(a)(4) to read as follows:


Sec.  6.12  Procedure for effecting compliance.

    (a) * * *
    (4) Take such other actions as may be provided by law, including, 
but not limited to, the initiation of proceedings under 2 CFR part 2424 
or any applicable proceeding under State or local law.
* * * * *

PART 8--NONDISCRIMINATION BASED ON HANDICAP IN FEDERALLY ASSISTED 
PROGRAMS AND ACTIVITIES OF THE DEPARTMENT OF HOUSING AND URBAN 
DEVELOPMENT

    6. The authority citation for part 8 continues to read as follows:

    Authority: 29 U.S.C. 794; 42 U.S.C. 3535(d) and 5309.

    7. Revise Sec.  8.57(a)(2) to read as follows:


Sec.  8.57  Procedure for effecting compliance.

    (a) * * *
    (2) The initiation of debarment proceedings pursuant to 2 CFR part 
2424; and
* * * * *

PART 15--PUBLIC ACCESS TO HUD RECORDS UNDER THE FREEDOM OF 
INFORMATION ACT AND TESTIMONY AND PRODUCTION OF INFORMATION BY HUD 
EMPLOYEES

    8. The authority citation for part 15 continues to read as follows:

    Authority: 42 U.S.C. 3535(d). Subpart A also issued under 5 
U.S.C. 552. Section 15.107 also issued under E.O. 12958, 60 FR 
19825, 3 CFR Comp., p. 333. Subparts C and D also issued under 5 
U.S.C. 301.

    9. Revise Sec.  15.109(d) to read as follows:


Sec.  15.109  How will HUD respond to a request for information from 
form HUD-92410 (Statement of Profit and Loss)?

* * * * *
    (d) What sanctions are available for improper disclosure of such 
information? An eligible potential purchaser or a potential investor 
(who has received the information from a potential purchaser and has 
been notified by that entity of its obligations under paragraph (b) of 
this section), who discloses information from form HUD-92410 in 
violation of this section, may be subject to sanctions under 2 CFR part 
2424.

PART 21--GOVERNMENTWIDE REQUIREMENTS FOR DRUG-FREE WORKPLACE 
(GRANTS)

    10. The authority citation for part 21 continues to read as 
follows:

    Authority: 41 U.S.C. 701; 42 U.S.C. 3535(d).

    11. Revise Sec.  21.510(c) to read as follows:


Sec.  21.510  What actions will the Federal Government take against a 
recipient determined to have violated this part?

* * * * *
    (c) Suspension or debarment of the recipient under 2 CFR part 2424, 
for a period not to exceed five years.
    12. Revise Sec.  21.605(a)(2) to read as follows:


Sec.  21.605  Award.

* * * * *
    (a) * * *
    (2) A block grant or a grant in an entitlement program, whether or 
not the grant is exempted from coverage under the governmentwide rule 
24 CFR part 85 that implements OMB Circular A-102 and specifies uniform 
administrative requirements.
* * * * *

PART 24--GOVERNMENTWIDE DEBARMENT AND SUSPENSION (NONPROCUREMENT)

    13. The authority citation for part 24 would be revised to read as 
follows:

    Authority: 42 U.S.C. 3535(d).

    14. Revise part 24 to read as follows:

PART 24--GOVERNMENTWIDE DEBARMENT AND SUSPENSION (NONPROCUREMENT)


Sec.  24.1  Debarment and suspension (nonprocurement).

    The policies, procedures, and requirements for debarment, 
suspension, and limited denial of participation are set forth in 2 CFR 
part 2424.

PART 25--MORTGAGEE REVIEW BOARD

    15. The authority citation for part 25 continues to read as 
follows:

    Authority: 12 U.S.C. 1708(c), 1708(d), 1709(s), 1715(b) and 
1715(f)-14; 42 U.S.C. 3535(d).


Sec.  25.2  [Amended]

    16. In Sec.  25.2, revise the reference to ``part 24 of this 
subtitle A'' to read ``2 CFR part 2424.''
    17. Revise Sec.  25.9(n) to read as follows:


Sec.  25.9  Grounds for an administrative action.

* * * * *
    (n) Employing or retaining:
    (1) An officer, partner, director, or principal at such time when 
such person was suspended, debarred, ineligible, or subject to a 
limited denial of participation under 2 CFR part 2424 or otherwise 
prohibited from participation in HUD programs, where the mortgagee knew 
or should have known of the prohibition;
    (2) An employee who is not an officer, partner, director, or 
principal and who is or will be working on HUD/FHA program matters at a 
time when such person was suspended, debarred, ineligible, or subject 
to a limited denial of participation under 2 CFR part 2424 or otherwise 
prohibited from participation in HUD programs, where the mortgagee knew 
or should have known of the prohibition;
* * * * *

PART 26--HEARING PROCEDURES

    18. The authority citation for part 26 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d).

    19. Revise Sec.  26.1 to read as follows:


Sec.  26.1  Purpose.

    This part sets forth rules of procedure in certain proceedings of 
the Department of Housing and Urban Development presided over by a 
hearing officer. These rules of procedure apply to hearings with 
respect to determinations by the Multifamily Participation Review 
Committee pursuant to 24 CFR part 200, subpart H, to hearings conducted 
pursuant to referrals by debarring or suspending officials under 2 CFR 
part 2424, and to hearings conducted pursuant to referrals by a hearing 
official under 24 CFR part 25, unless such regulations at 2 CFR part 
2424, 24 CFR parts 25, or 200, provide otherwise. They also apply in 
any other case where a hearing is required by statute or regulation, to 
the extent that rules adopted under such

[[Page 14025]]

statute or regulation are not inconsistent.
    20. Revise Sec.  26.9 to read as follows:


Sec.  26.9  Notice of administrative action.

    In every case, there shall be a notice of administrative action. 
The notice shall be in writing and inform the party of the 
determination. The notice shall state the reasons for the proposed or 
imposed action, except where general terms are permitted by 2 CFR part 
2424. The notice shall inform the party of any right to a hearing to 
challenge the determination, and the manner and time in which to 
request such a hearing. A supplemental notice may be issued, in the 
discretion of the initiating official, to add to or modify the reasons 
for the action.

PART 84--UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND 
AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, AND 
OTHER NON-PROFIT ORGANIZATIONS

    21. The authority citation for part 84 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d).

    22. In Sec.  84.2, revise the definition of ``Suspension'' to read 
as follows:


Sec.  84.2  Definitions.

* * * * *
    Suspension means an action by HUD that temporarily withdraws HUD 
sponsorship under an award, pending corrective action by the recipient 
or pending a decision to terminate the award by HUD. Suspension of an 
award is a separate action from suspensions under HUD regulations 
implementing E.O. 12549 and E.O. 12689, ``Debarment and Suspension,'' 
at 2 CFR part 2424.
* * * * *
    23. Revise Sec.  84.13 to read as follows:


Sec.  84.13  Debarment and suspension; Drug-Free Workplace.

    (a) Recipients and subrecipients shall comply with the 
governmentwide nonprocurement debarment and suspension requirements in 
2 CFR part 2424. These governmentwide requirements restrict subawards 
and contracts with certain parties that are debarred, suspended, or 
otherwise excluded from or ineligible for participation in federal 
assistance programs or activities.
    (b) Recipients and subrecipients shall comply with the requirements 
of the Drug-Free Workplace Act of 1988 (42 U.S.C. 701), as set forth at 
24 CFR part 21.
    24. Revise Sec.  84.44(d) to read as follows:


Sec.  84.44  Procurement procedures.

* * * * *
    (d) Contracts shall be made only with responsible contractors who 
possess the potential ability to perform successfully under the terms 
and conditions of the proposed procurement. Consideration shall be 
given to such matters as contractor integrity; compliance with public 
policy, including, where applicable, Section 3 of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701u); record of past performance; 
and financial and technical resources or accessibility to other 
necessary resources. In certain circumstances, contracts with certain 
parties are restricted by implementation of Executive Orders 12549 and 
12689, ``Debarment and Suspension,'' at 2 CFR part 2424.
* * * * *
    25. Revise Sec.  84.62(d) to read as follows:


Sec.  84.62  Enforcement.

* * * * *
    (d) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude a recipient from being subject to 
debarment and suspension under HUD's regulations at 2 CFR part 2424 
(see Sec.  84.13).
    26. Revise Sec.  84.84(e)(4) to read as follows:


Sec.  84.84  Procurement standards.

* * * * *
    (e) * * *
    (4) Contracts shall be made only with responsible contractors who 
possess the potential ability to perform successfully under the terms 
and conditions of the proposed procurement. Consideration shall be 
given to such matters as contractor integrity; compliance with public 
policy, including, where applicable, Section 3 of the Housing and Urban 
Development Act of 1968 (12 U.S.C. 1701u); record of past performance; 
and financial and technical resources or accessibility to other 
necessary resources. In certain circumstances, contracts with certain 
parties are restricted, as set forth at 2 CFR part 2424.
* * * * *
    27. Revise Sec.  84.86(b)(4) to read as follows:


Sec.  84.86  Termination and enforcement.

* * * * *
    (b) * * *
    (4) Relationship to debarment and suspension. The enforcement 
remedies identified in this section, including suspension and 
termination, do not preclude a recipient from being subject to 
debarment and suspension under HUD's regulations at 2 CFR part 2424 
(see Sec.  84.13).

Appendix A to Part 84 [Amended]

    28. Remove paragraphs 8 and 9 from Appendix A.

PART 85--ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE 
AGREEMENTS TO STATE, LOCAL AND FEDERALLY RECOGNIZED INDIAN TRIBAL 
GOVERNMENTS

    29. The authority citation for part 85 continues to read as 
follows:

    Authority: 42 U.S.C. 3535(d).

    30. In Sec.  85.3, revise the definition of ``Suspension'' to read 
as follows:


Sec.  85.3  Definitions.

* * * * *
    Suspension means, depending on the context, either: temporary 
withdrawal of the authority to obligate grant funds pending corrective 
action by the grantee or subgrantee or a decision to terminate the 
grant, or an action taken by a suspending official in accordance with 2 
CFR part 2424, to